Marks and Spencer (M&S) has revealed steep falls in annual sales and profits, hours after accelerating its store closure programme.
The chain reported pre-tax profit in the year to 31 March came in 62% down on the previous year at £66.8m.
While its bottom line was hit by £321.1m in costs related to its latest turnaround efforts, as reported by Sky News, trading profits were 5.4% lower.
M&S said that reflected weaker food margins and like-for-like sales falling 0.9% in its core UK market.
Image: M&S opened 62 Simply Food stores in its last financial year
The fourth quarter’s performance showed a deterioration, largely blamed on “unseasonable weather” despite an earlier Easter.
M&S admitted its clothing and home division was failing to attract younger customers and families.
While the results coincide with a period of tough trading for the wider high street in a slowing economy, the core trading performance will disappoint long-suffering investors nevertheless after a series of previous turnaround efforts delivered little.
M&S shares – down 7% in the year to date and the biggest fallers on the FTSE 100 on Tuesday – rose 6% in early trading on hopes the worst is behind the 134-year-old retailer.
But analysts have warned the company – once the darling of UK retail – risks being relegated from the top flight, to be replaced by food rival Ocado, as its market value continues to slide.
Image: M&S has struggled to grow fashion sales for years
It currently stands at £4.74bn versus the online specialist’s £6bn.
M&S has launched a series of turnaround plans since the financial crisis – with clothing and home consistently dragging.
The chain revealed on Tuesday that it was putting thousands of jobs at risk through plans to extend its programme of store closures to 100 sites by 2022.
The company was particularly slow to get its online operations into gear and has admitted its website remains “slow”.
But chief executive Steve Rowe, who took over in 2016, used the results to promise shareholders its transformation plan would tackle the “basics” under new leadership teams in its core food, clothing and home divisions.
Image: Steve Rowe is aiming to invest more in the retailer’s digital sales channels
He said: “At our half-year results in November I outlined the need for accelerated change at M&S.
“The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business.
“These changes come with short term costs which are reflected in today’s results.
“There are a number of structural issues to address and we are taking steps towards fixing these.
“The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business.
“This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years.”
Commenting on the results Laith Khalaf, senior analyst at Hargreaves Lansdown, said M&S investors were essentially being asked to take a “leap of faith”.
“M&S is simply struggling to make progress in a world where a compelling mobile app is every bit as important as a presence on the high street, and considerably less expensive.
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“In the last year traditional retailers like Marks have faced a perfect storm of rising costs, a constrained consumer, and the relentless growth of online competition.
“That’s reflected in the fact M&S is one of the most shorted stocks in the market, with 12% of the company’s shares out on loan to those who have bet against it.”